 Good day fellow investors! One of the most important books for every long-term investor or every investor who wants to create wealth over the long term is the intelligent investor by Benjamin Graham. However, the last edition of the book which has been sold in millions of copies has been written in 1970, which means that some parts of it are outdated or they aren't. So I'm going to go through the chapters of the book. Today we'll do chapter 1 and we'll put it into today's perspective. What was going on then and what's going on now? The learning is essential to understand how to position yourself in this market in perspective of your life investment cycle. So stay with me today, chapter 1, the distinction between the investor and the speculator. Let me quote Graham, an investment operation is one in which upon thorough analysis promises safety of principle, safety of principle and an adequate return. Operations not meeting these requirements are speculative. The key with Graham, Buffett, Claremont, whoever, whatever value investor is, don't lose money, don't lose money, don't lose money. If you don't lose money over your lifetime, you'll do very, very, very, very, very well. And that's also the key to Benjamin Graham. Whatever investment or speculation that there is the risk of permanent capital loss, as Munger would say it, that is a speculation and that's something that should be approached very, very carefully if one must do that and not with a big part of the portfolio. So investment means no chance of permanent capital loss. What's very interesting from the book is that it was written in the 1970s and this is the chart from the Dow Jones index from 1948 till 1969. As you can see it's very similar to what stocks did in the last 45 years. Some ups and downs, some huge downs as we have seen in 2000 and 2009, but stock levels went only up, up and up. The S&P 500 went even higher in that period. So the market then in the 1970s performed terribly in the subsequent 12 years, 15, 20 years. It took two more than 20 years to reach the same levels. So that's something we might expect too and that's why the book is so important to be read now. Further, Benjamin Graham says then in 1969 where stocks were extremely high, extremely pricey with high valuations everybody related to the stock market was called an investor. Like now, if you put your money in stocks even in cryptocurrencies investing in cryptocurrencies. In 1984 where nobody wanted to look at stocks, stocks were condemned as speculative, as a casino, as a gambling place, not something that the decent person would do. Do you see the difference in returns? 1948, 1968, 69, 1970. The difference in returns you have to invest when nobody wants to invest and you have to be very, very careful when everybody, everybody, even your cat thinks that she is an investor. So think about that in the long-term investing cycle. Graham tells it very simply about speculating. Speculating is always fascinating and it can be a lot of fun while you are ahead of the game. Never add money to this account just because the market has gone up. That's the time to think of taking money out of your speculative fund. So to whom should we listen? To Benjamin Graham or the plethora of investment advisors who tell us to invest in index funds because if you invest in index funds you cannot lose. Well if they go a little bit more in history you can lose a lot especially if stocks are extremely expensive like they are now. So what does Graham advise? And this is very important. He differentiates between the defensive investor, one who doesn't take any risks and the aggressive investor, which I think most of my viewers are who want to beat the market. And he says that we can beat the market. Let's first discuss the defensive investor and then how to beat the market. So the defensive investor is one interested in safety plus freedom from bother. Graham's advice is simple. Hold between 25% and 75% of your portfolio in bonds or stocks and rebalance when the market is dangerously high. So when the market is high 75% bonds, 25% stocks, when the market is cheap 75% stocks, 25% bonds. Remember Buffett has about 40% of his portfolio in cash now. So what to do now? Bonds are yielding more and more especially if you buy short-term bonds that give you 2% you have no risk and you will see in a year, two years what will be the best investment. Sometimes, especially now, for the defensive investor, one who doesn't want to think a lot, short-term bonds, even treasury inflation protected bonds might be the way to go. Big part of portfolio, defensive or weather portfolio, you don't care what happens, you don't lose money and something you live in stocks, okay, and then you rebalance accordingly if that even increases even more or if that drops, you sell your bonds to buy better stocks. What can the aggressive investor do? There are three ways that Graham says you can beat the market. One is trading, second is short-term selectivity, buying stocks of company reporting or expected to report increased earnings or where there are other catalysts and three is long-term selectivity, buying great, great businesses, even great tech companies that will do well over time. Graham is against trading because he says it's a fool's game, so you win some, you lose some, if you must trade, okay, trade but with a small part of your portfolio and then sell when you are winning. Secondly, short-term situations, he says everybody looks at them, so those are usually priced in the price of the stock market. So as always, Graham says long-term perspective on the stock market is your best advantage. To quote, To enjoy a reasonable chance for continued better-than-average results, the investor must follow policies which are one, inherently sound and promising, good investments thus, my addition, and two, not popular on Wall Street. In addition, Graham says arbitrage opportunities, mergers and acquisitions, liquidations, and then he says something very important which is very much related to now. A final example of golden opportunities not recently available. A good part of our operations on Wall Street has been concentrated on the purchase of bargain issues, selling at less than their share in the net current assets, working capital alone. So back then it was difficult to find such investments, you know the long-term results for the next 15 years have been terribly negative. Now, we are in a similar situation. Will long-term investment results be negative? For those who are not prepared, for those who are not specializing their investments into detailed investments that will beat the market in the next 10-15 years, results will be negative. So subscribe to the channel, we'll look for investment strategies that are good from a risk-reward perspective in this market and we will again increase that when the market drops. Thank you. Looking forward to your comments and I'll see you in the next video.